Alon Blue Square, the parent company of the bankrupt Mega supermarket chain, has paid only 118 million shekels (about $30 million) of the 320 million it committed to injecting into the business last year, Mega’s court-appointed trustees said Wednesday.
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The accusation, made by attorneys Ehud Gindes and Gabi Trabelsi, appointed to oversee Mega, came as they presented their findings for the reason behind the collapse of the retailer, once Israel’s second-largest supermarket chain, and forced it to seek protection from creditors last month.
The 320 million shekels was part of 800 million that Alon Blue Square and its parent company Alon Israel had committed last July as part of a bailout agreement, which was supposed to enable Mega to recover from heavy debt and resume normal business operations.
The trustees said the company also failed to meet its commitment to convert up to 30% of the debt Mega owed to its bigger suppliers into Alon Blue Square stock, in exchange for a three-year grace period to repay it. The shares were supposed to be allocated as part of a 150 milion-shekel rights offering, but the fundraising was not completed by the January 15 deadline.
Given that the debt amounted to 193 million shekels, they said, the share allocations would have been considerable and would have substantially diluted the stakes of its controlling shareholders. Gindes and Trabelsi told the court they intended to pursue the issue as they seek to settle Mega’s debts.
The claims come as Alon Israel moves to sell its 72.7% stake in Alon Blue Square to the Israeli-German entrepreneur Moti Ben-Moshe for 115 million shekels. Meanwhile, the trustees are seeking to sell Mega to a single buyer or more.
The trustees also said they were considering taking over a suit filed in 2013 seeking to reverse a 117 million-shekel dividend Mega paid to Alon Blue Square, saying the chain’s finances at the time didn’t justify taking so much money out of the retailer.